I have very mixed feelings about this. In a way I admire him for having his priorities right. He is walking away from over a million dollars to spend more time with his family and protect his future health. Not many people would do that. On the other hand he did make a commitment to the team and he should have stayed for the rest of the year before announcing his "retirement." What if the Broncos lose another offensive lineman for the season?
As far as quitting on the team goes, the Broncos are probably better off without him. If you don't love playing football and your heart isn't in it 100%, you are not going to be able to play at an NFL level. If you are an offensive lineman and you are playing while scared of getting hurt, you are not going to be a very good player. At least by freeing up a roster spot, the Broncos can bring in somebody else, although there aren't many pro-caliber OLs sitting out this year.
There is probably more to this story than him just not wanting to play football anymore.
Oddly, the official Broncos website has almost nothing to say about the move. The only thing i could find is this:
This is a minor annoyance for the Broncos. Won't change how they play, and sure there'll be plenty of guys out there that'd like to play for Manning.